A day af­ter Prime Min­is­ter Naren­dra Modi an­nounced the notes would no longer be le­gal ten­der in a blitz against “black money”, his fi­nance min­is­ter said re­place­ment 500 and 2,000 ru­pee bills would be avail­able from to­day and only tax dodgers stood to lose out from the move.

All banks and cash ma­chines were or­dered to close yes­ter­day in prepa­ra­tion for the turn­around, trig­ger­ing a late night rush by cus­tomers to with­draw smaller notes from ATMs.

Cus­tomers will be able to ex­change their old bills for new notes or de­posit them in their ac­counts but face ma­jor scru­tiny by tax au­thor­i­ties if they can­not ac­count for a sud­den swell in their bal­ance.

“Housewives with small cash sav­ings and farm­ers have no need to worry. Peo­ple who with­draw money from the banks have noth­ing to worry about ... all they have to do is ex­change it or de­posit it in the bank,” Fi­nance Min­is­ter Arun Jait­ley told pub­lic tele­vi­sion.

“But if you have il­le­gal money, then you have to give its source. If you have crim­i­nal money, then you are in se­ri­ous trou­ble.”

While the move was praised by busi­ness lead­ers and com­men­ta­tors, In­dian stocks fell 6% in early trade before stag­ing a slight re­cov­ery and were around 3% lower at lunchtime than at the open­ing.

The slide was also par­tially at­trib­uted to un­cer­tainty sparked as Don­ald Trump claimed the US pres­i­dency in a stun­ning up­set.

Su­jan Ha­jra, an economist at the Mum­baibased bro­ker­age firm Anand Rathi se­cu­ri­ties, said there would be an in­stant neg­a­tive im­pact on con­sumer spend­ing that would af­fect the whole econ­omy.

“The gov­ern­ment’s de­mon­eti­sa­tion scheme will af­fect con­sump­tion across India as peo­ple won’t have enough cash to con­duct ma­jor trans­ac­tions for the next few days,” Ha­jra said.

Ma­jor queues built up out­side cash ma­chines ahead of the mid­night dead­line as cus­tomers tried to with­draw 100 ru­pee bills. There was also a rush by motorists to gas sta­tions, which will con­tinue to ac­cept the old bills un­til the end of the week as will trans­port op­er­a­tors and hos­pi­tals.

The 500 and 1,000 notes are the largest bills in use in India which is still a mas­sively cash-in­ten­sive econ­omy. – AFP